Impact of IFRS on Accounting Information: The Savoy Hotel's Case

This dissertation examines the significance and relevance of accounting information following the adoption of International Financial Reporting Standards (IFRS) within the hospitality industry in the United Kingdom, specifically focusing on The Savoy Hotel. The research investigates the benefits of IFRS adoption, its impact on financial disclosure, and strategies for successful implementation. The study includes a literature review discussing the importance of IFRS, the research methodology involving interpretivism and an inductive approach with secondary data collection, and a discussion of the implications. The dissertation aims to understand the concept of IFRS, evaluate its impact on The Savoy Hotel's financial disclosure, analyze the benefits of adoption, and recommend strategies for effective implementation. The research utilizes qualitative data analysis to explore the topic and aims to provide valuable insights into the financial reporting practices within the hospitality sector.

DISSERTATION

Table of Contents
CHAPTER 1: INTRODUCTION....................................................................................................3
1.1 Background to the organisation........................................................................................3
1.2 Rationale of the research..................................................................................................4
1.3 Overall aim of project.......................................................................................................4
1.4 Objectives.........................................................................................................................4
1.5 Methods of analysis..........................................................................................................5
CHAPTER 2: LITERATURE REVIEW.........................................................................................7
2.1 Introduction......................................................................................................................7
2.2 Understand the importance of International Financial reporting Standards.....................7
2.3 The benefits of adoption of International Financial Reporting Standards.....................12
CHATPER 3: RESEARCH METHODOLOGY...........................................................................15
3.1 Introduction....................................................................................................................15
3.2 research philosophy........................................................................................................16
3.3 research approach...........................................................................................................16
3.4 Research design..............................................................................................................17
3.5 Data collection................................................................................................................17
3.6 Data analysis...................................................................................................................17
3.7 Validity and reliability....................................................................................................18
CHAPTER 4: DISCUSSION AND ANALYSIS..........................................................................19
Chapter 5 recommendation and conclusion...................................................................................22
5.1 Conclusion......................................................................................................................22
5.2 Recommendation............................................................................................................23
Reference.......................................................................................................................................25

CHAPTER 1: INTRODUCTION
1.1 Background to the organisation
From the last few years, International financial reporting standards have become the
standard of choice for many companies. It is perceived to be more flexible and neutral as
compared to standard of any individual country. They are expected to assistances depositors
through the comparability of financial statements. Hospitality industry is one of the fastest
growing sectors in all over the world. It is segmented into various sectors that are
accommodation, food and beverage, travel and tourism, etc. (Nobes, 2014). The Savoy hotel is
operating its business in Hospitality industry. It is a multinational diversified hospitality
company which manages and franchises a broad portfolio of hotels and related lodging facilities.
Number of employees operating in the firm are more than 177,000. The present research is based
on the importance and relevance of accounting information after adoption of International
Financial Reporting Standards within Hospitality Industry of United Kingdom.
International financial report standard is usually called as IFRS. It is known as the set of
international accounting standard which shows the way specific type of transaction and other
events which are required to be reported in financial statements. It is issued by international
accounting standard board (Leuz and Wysocki, 2016). Their role is to make clear accurate way
accountants should maintain and report their account. Reason for establishing IFRS is that to
have common accounting languages which can be understandable by both accounts and business
from firm to firm and nation to nation. IFRS is adopted by firm in order to maintain stability and
transparency throughout the financial world. Therefore, it allows business and individual
investor to ensure educated financial decisions which help them in looking exactly what is going
in company in which they are interested in investing. IFRS is the standard in various parts of the
world such as European Union, South Africa, Asia, etc.
However, adopting International Financial Reporting Standards provide benefit to both
company as well as country (Frias‐Aceituno and Garcia‐Sánchez, 2014). Nations which are
benefited from the standards are those which have lots of international business and investing. It
is identified that adoption of IFRS leads to save money and alternative comparison cost and
individual investigations (Flower, 2015). There are some standards of IFRS requirements. It
leads to cover various range of accounting activities. There are many aspects of business
practices for which IFRS set mandatory rules. The Savoy hotel can gain lots of benefits through

adopting International Financial Reporting Standards. It leads to provide an opportunity to attract
international investors.
1.2 Rationale of the research
Reason for conducting the research is to develop in-depth understanding related to the
selected topic that is to identify the importance and relevance of accounting information after
adoption of International Financial Reporting Standards within Hospitality industry of United
Kingdom (Cheng, Green and Romi, 2014). The present research will help gaining knowledge
related to the accounting principles and the way it kept transparency in between company and
investors. Principles of accounting are known as the rules of actions or conduct adopted by
accountants. The business is becoming more global there is push for a worldwide adoption of
single set of accounting standard. There are many studies which are evaluating the impact of
adoption of IFRS which are related to the higher quality disclosure. Through adopting IFRS,
companies can improve international financial reporting and transparency, pay to a more well-
organized global financial market and enhance international comparability.
IFRS apparently have higher quality as compared to the most domestic accounting norms
and standards as well as many studies have reported its impact. The present research will help in
gaining enough knowledge related to the significance of IFRS and way The Savoy hotel can
adopt it. The research will help people who are carrying out their education program (Adams,
2015). They can learn the way in which IFRS will help company in gaining investors and
making global position in the financial market. The adoption of IFRS can help in gaining
benefits to investors and make use of financial statement for minimizing the cost of investment
and enhance the quality of the information provided. Along with this, investors can become more
willing to provide finance with greater transparency. The IFRS has some goal such as for
developing global accounting standards requiring transparency, comparability and high quality in
financial statements.
1.3 Overall aim of project
Aim: To identify the importance and relevance of accounting information after adoption of
International Financial Reporting Standards (IFRS) within Hospitality Industry of United
Kingdom – A study of The Savoy hotel.

1.4 Objectives
 To understand the importance of International Financial Reporting Standards
 To evaluate the impact of International Financial Reporting Standards on financial
disclosure of the Savoy hotel.
 To analyse the benefits of adoption of International Financial Reporting Standards on The
Savoy hotel
 To recommend strategies for successful adoption of International Financial Reporting
Standards by the Savoy hotel.
Research questions
Q1. What is the concept of International Financial Reporting Standards?
Q2. How likely the adoption of International Financial Reporting Standards will be on the
financial disclosure of Savoy hotel?
Q3. Why it is beneficial to undertake the standards of International Financial Reporting by Savoy
Hotel?
Q4. What are the strategies for a successful adoption of International Financial Reporting
Standards by Savoy hotel?
Q5. What are the consequences of adopting IFRS by the hospitality based firms in UK?
1.5 Methods of analysis
Research methodology is the section that provide information related to various methods
that can be used for analysis of the research. Various tools and techniques which are covered in
this study are data collection method, research approach etc. Here below are some tools and
techniques that will be used in the present research.
Research Philosophy:
It is known as one of the crucial component of research methodology and assist in
understanding the way through which information can be gathered in context to analyse the
study. Here one of the aim of investigator is to carry out study so that set of results can be
accomplished. Therefore, it is considered as effective method to conduct the research and
gaining proper results (Guix, Bonilla-Priego and Font, 2017). There are two types of
philosophies that are interpretivism and positivism. These both philosophies are different from

each other and helpful for carrying out the research. Positivism focus on believing that reality is
of stable nature that can be shows and detected from the views of research objectives. On the
other side interpretivism is known as research philosophy that could be defined as relatively not
reasonable for gathering information to develop understanding for particular subject matter. For
the present research interpretivism philosophy. will be used by the scholar which assist in
choosing qualitative set of data to examine the study. Reason for selecting this method is that it
helps in analysing the benefits of adoption of IFRS for Hilton hotel. It also assists in supporting
crucial findings and getting useful information so that company can adopt IFRS in an effective
manner.
Research approach:
Research approach is known as the method in which investigator can conducts the
research in an effective manner. It can be stated as a plan that help in improving the validity of
the research at large extent (Bailly and Comino, 2017). It is classified into two types inductive
and deductive approach. For the present research inductive approach will be used by the scholar.
Inductive approach makes research from the specific condition for developing a wider general
ideas and theories regarding subject matter. The assessment can be carried out for sake of
developing theories. Reason for selecting this method is that it is suitable in getting valid
outcome.
Data collection method
Data collection method is known as the method which is considered as effective tool in
respect to collect the information from different sources. Through collecting information from
different sources research can easily reach to the valid outcome. It is comprising of two types
primary and secondary (Wright, Wahoush and Jack, 2016). Secondary information is that which
is already published in the books and journals by different authors. The present dissertation aim
is to identify the importance and relevance of accounting information after adoption of
International Financial Reporting Standards within Hospitality industry of United Kingdom,
therefore secondary method will be considered for getting valid outcome. All the secondary
information will be gathered from the books and journals. Through collecting secondary
information researcher can easily incorporate views of authors that help in making research more
effective. Further it assists researcher in reaching to the valid outcome. Along with this, different

theories will be incorporated such as the diffusion of innovations theory, world-level institution
theory and institutional theory.
Data analysis:
Data analysis is known as one of the important method on the research which help on
reflecting the effectiveness of data which is being accessed from different sources of data
collection secondary and primary. After collecting information, it is important to analyse it with
the use of effective tools and techniques (Kerr, Eckert and Wandwabwa, 2016). Through
analysing the information, it will become easy to generate appropriate results. Based on outcome
the researcher can describe whole finding and generate valid conclusion. There are two methods
through which information can be analysed qualitative and quantitative. For the present research
qualitative method will be considered by the scholar. In this several themes will be prepared and
views of different authors will be analysed in an appropriate manner. The entire study is based
on qualitative analysis.
Tools and Framework
 Facilitates comparability
 Standardization
 Assists stakeholders over the globe in decision making
 Helps them in investing money internationally'

CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
The section of literature review is considered as one of the important part that is attached
with the thesis. The main reason behind carrying put the particular chapter is to develop a
suitable framework on the basis of selected topic. This chapter will provide views and opinion of
different authors which is incorporated by them in their study. The present chapter will cover the
importance of International Financial Reporting Standards for the hospitality industry. Along
with this, the impact of International Financial Reporting Standards on financial disclosure of the
Savoy hotel is discussed.
2.2 Understand the importance of International Financial Reporting Standards
According to the view of Nobes, (2014) accounting principle is considered as the best
media which can be used by firm for communication between different stakeholder and
company. It helps them in measuring and develop understanding related to the firm performance.
According to the view of Lang and Stice-Lawrence, (2015) international Financial
Reporting Standards is known as the set of accounting standard which is constructed by the
international standards board which is become the global standard for making of public financial
statements. Reason for developing IFRS is to develop the public interest, understandable,
enforceable, a single set of high quality and globally accepted financial report. It is fully based
on the clearly articulated principles. Since from last few years IFRS has become standard of
choice for many jurisdictions. It is considered as more flexible and neutral as compared to
standard of the single nation. They are expected to advantage stockholders over the better-quality
comparability of monetary statements.
As per the view of Christiaens, Vanhee and Van Cauwenberge, (2015), International
financial reporting standards is known as set of principle which is based on issues and
establishment through international accounting standards. Along with this, it is basically adopted
by various countries in all over the worlds. It also leads to make sure transparency and
comparability in accounting practice. Through adopting IFRS company can easily make
improvement in its comparability and transparency of financial accounting information. These
both are considered as key qualitative characteristics of financial information which is more
useful for the users.

Kim, Shi and Zhou (2014) stated that the adoption of IFRS is done with the aimed to accomplish
harmonization and promotion of accounting practices through making sure consistency in
reporting format in different countries. It leads to minimize cost of processing accounting
information to investors and assist in making improvement in efficiency of capital market. At
present in all over the world there are 120 countries who are reporting jurisdiction and needed
domestic listed firm to prepare all their financial statements in respect with International
Financial Reporting Standards. The adoption and implementation of IFRS is considered as one of
essential events in history of accounting in all over the world which induce significant changes in
the accounting practices. Tschopp and Huefner (2015) argued the before the implementation of
IFRS, the existed accounting system was hardly affected by the government and legalistic
influence which is in contrast with common law accounting nations such as North America.
Accounting information
According to the view of Frias‐Aceituno Rodríguez‐Ariza and Garcia‐Sánchez, (2014), It
is considered as one of the best medias of communication which in between the different
stakeholder and company which help them in evaluating and gaining information related to
performance of the firms. It assists in facilitating communicative role of the accounting
information which company developed in their financial statement. Along with this it has some
of the qualitative characteristics which lead to make it relevant in respect to make decision for
investing from different investors. Belal, (2016) stated that decision of investors is stated as
qualitative and informed at the time when it published of publishing accounting information of
high quality. Along with this, different users of accounting information make use of it for
measuring economic value of firm with assumptions such as there is link between accounting
numbers and the market value of companies. Liao, Luo and Tang, (2015) defined accounting
information as information which is obtained from the accounting system of a specific company
and reflected in the special report.
According to the view of Chauvey, Giordano-Spring and Patten, (2015), one of the main
objectives of the international accounting standard board is to create a one specific global
accounting standard which needed comparable information in financial statements with the main
objectives to assist participates in the various capital markets of the world and different users of
the firm in order to make economic decision. At present IFRS developed by IASB is approved in
many of the nations.

The theoretical framework developed by IASB in 2010 stated the qualitative
characteristics of useful financial information together with verifiability, appropriateness and
understandability. Comparability can be defined as a relative ability of users that help them in
finding out and develop understanding related to the similarities and distinct between items. It
has following points that re as follows:
Comparability is non-uniformity: Flower, (2016) state that in order to make information
comparable, such as things which must look differently various things Ioannou and Serafeim
(2017) interpret comparability as a meaning that is same set of economic events that must
produce similar accounting amounts in different firms which prepare financial statements similar
to the same accounting standard.
Secondly, comparability is stated as important qualitative features. It is considered as a realistic
depiction of a relevant economic phenomenon which have naturally some degree of
comparability which a realistic representation of a similar economic phenomenon through
another reporting entity. There are various prior literatures which has developed analytics
models based on definition of comparability. Rainey, Pollard and Pilgrim, (2015) analyzed
comparability with the use of comparability approach in accounting system. Brusca, Caperchione
and Rossi, (2016) examine the comparability of financial statement through calculating the
similarity of accounting purposes with the use of correlation between the bookkeeping data or
the reappearance on properties and stock market.
AUTHOR explore the effect of mandatory International Financial Reporting Standards adoption
on comparability. It is forecasted that adoption of IFRS is done without sufficient
implementation guidance then it can weaken comparability results.
The impact of International Financial Reporting Standards on financial disclosure of the Savoy
hotel.
Denicolai, Zucchella and Strange, (2014) state that impact of adopting IFRS on the
company is that it helps in indicating the profitability and leverage ratio which lead to increase
significantly. However, the price to earning, equity and quick ratios which decrease after
converging to IFRS. But there are no significant changes take place in current ratio. There are
various positive impacts of International Financial Reporting Standards adoption which is
asserted by IFRS advocates. Kumar., (2015) recommended that to have a unified standard in
financial reporting assist company in eliminating double preparation of financial statement.

Along with this, it leads to facilitates global movement of capital and better integration of
financial market. de Villiers, Rinaldi and Unerman, (2014) investigated that there is need to
adopting IFRS and it lead to bring some benefits and challenges on the value relevance of
earning or not. Further it is analyses that adoption of the IFRS has bring some significant impact
on the value relevance of books value and earning through the use of traditional linear pricing
models.
Standardization
According to the view of Tschopp and Huefner (2015) one of the main goal of the
international business accounting is to provide a set of different tools which can be used in order
to meet the requirement of each application. However, accounting application do not have
uniform security and reliability requirements which is not likely to plan a single accounting
application.
According to the view of Mwila Mulenga, (2016) the motivation driving the use of all
inclusive accounting information structure is that a single game plan of measures ensures relative
trades are managed the same by associations around the world, achieving all around essentially
indistinguishable budgetary clarifications. Regardless, using the accounting measures
dependably by firms it will find that they are variable, since they are depending upon the moving
budgetary, political, and social conditions in a solitary state. Accounting standard-setters and
controllers around the globe are needing to mix accounting standards with the goal of making
one course of action of dumbfounding accounting precepts to be associated the world over.
The Elshandid and Neri, (2015) state that globalization of overall cash related markets
has extended the necessity for general comparable accounting rules and control. The required
execution of (IFRS) by recorded firms that work to some degree states of the European Union, as
of January 1, 2005, should help theorists in their fundamental initiative and enhance securities
trade viability. Meanwhile, the general affirmation of International Financial Reporting
Standards may show their high quality.
According to the opinion of Hirst, Thompson and Bromley, (2015) globalization depicts a
strategy by which commonplace economies, social requests, and social orders have ended up
being consolidated through an overall arrangement of correspondence, transportation, and trade.
The term is every so often used to imply especially to investor globalization. The joining of
national economies into the overall economy through trade, remote direct hypothesis, capital

streams, migration, and the spread of development. With growing globalization of the business
focus, overall examiners expect access to financial information in perspective of mixed
accounting benchmarks and techniques. Theorists ceaselessly challenge investor choices that
require an examination of budgetary information. Without harmonization in the fundamental
method of budgetary reports, authentic financial differences can't be separated from elective
accounting checks and frameworks. Feng, Wang and Huang, (2017) argued that, Harmonization
is used as a bargain of different viewpoints, which is more reasonable than consistency, which
may compel one country's accounting point of view on all others. Affiliations, private or open,
expect information to encourage its diverse advantages in different divisions of the economy.
With the improvement of general business trades by private and open substances, the need to
mastermind various wander decisions has extended.
Newman, Mhaka and Milondzo, (2017) describes that the advance to IFRS presents firms with
inconveniences including particular complexities, the cost of advance and change, the time
factor, and the inadequate experience and data. Moreover, the sensible regard presentation of
International Financial Reporting Standards is likely going to display flightiness in book regards
and nitty determined benefit, and in this manner, damage the fiscal profile of grasping firms.
These examinations may affect the cash related practices of associations and may motivate them
to reconsider their philosophies and fundamental authority shapes with a particular ultimate
objective to calm the adversarial impact of gathering on their accounting numbers.
Jong (2017) state that, standardization is the route toward making and agreeing upon specific
benchmarks. The standard is a report that develops uniform planning or concentrated judgments,
criteria, methods, systems, or practices. A couple of models are obligatory while others are think.
Practical measures are available in case one uses them. Some are acknowledged models meaning
a standard or need which has an easygoing anyway winning status. A couple of rules are by law
meaning formal authentic requirements. Formal rules relationship, for instance, the International
Organization for Standardization or the American National Standards Institute are self-governing
of the makers of the items for which they convey benchmarks.
According to the view of Morales-Díaz and Zamora-Ramírez, (2018), harmonization
enables diverse nations to have distinctive models as long as the benchmarks don't strife. For
instance, inside the European Union harmonization program, if fitting divulgences were made,